Major Event Analysis: Technical Standards and Protocol Development

Introduction

The maturation of technical standards and protocols is key for any technological field to transition from chaos to order, from workshop to industrialization. In the blockchain field, the power of standardization is equally crucial.

1. Establishment of the ERC-20 Token Standard

• Event Background: In Ethereum's early days, each newly created token had its own unique smart contract implementation. This meant that applications needing to interact with tokens—exchanges, wallets, and DApps—had to write customized code for each new token, greatly hindering token circulation and ecosystem integration.
• Event Details: In November 2015, Ethereum developer Fabian Vogelsteller proposed EIP-20 (Ethereum Improvement Proposal #20), suggesting the creation of a universal interface standard for tokens on Ethereum. This standard defined a set of common functions that all token contracts should follow, such as totalSupply() (total supply), balanceOf() (query balance), transfer() (transfer), etc. This proposal was eventually widely accepted by the community, becoming the de facto ERC-20 standard.
• Direct Impact:
  • Composability and Interoperability: The ERC-20 standard enabled all tokens following this standard to be seamlessly supported by any wallet, exchange, or DApp. This plug-and-play interoperability greatly promoted token issuance and circulation.
  • Igniting ICO Boom: ERC-20 dramatically lowered the technical barrier for "one-click token creation," allowing anyone to deploy a standard-compliant token contract within minutes. This was the most important technical prerequisite for the 2017 ICO boom.
• Long-term Significance:
  • Foundation for DeFi and NFTs: The ERC-20 standard is the cornerstone that enabled the DeFi world to be built. All DEXs, lending protocols, etc., rely on this unified standard for token interactions. Later, the ERC-721 standard for non-fungible tokens was derived from this foundation, spawning the NFT ecosystem.
  • Network Effects Paradigm: ERC-20's success demonstrated the enormous power of technical standards in building platforms and network effects. It attracted numerous project teams to issue assets on Ethereum, thereby locking in Ethereum's core position as an "asset issuance platform."
• Lessons Learned: A simple, open, widely accepted technical standard may be more valuable than countless complex but closed systems. Standardization is the prerequisite for achieving large-scale collaboration and innovation.
• Subsequent Development: ERC-20 remains the most important and fundamental token standard on Ethereum today. Building upon it, the community has developed a series of standards including ERC-721 (NFTs), ERC-1155 (multi-token standard), etc., continuously enriching Ethereum's asset types.

2. Maturation of Layer 2 Solutions

• Event Background: With the explosion of DeFi and NFT applications on Ethereum, the mainnet (Layer 1) became extremely congested, with transaction fees (Gas Fees) skyrocketing. During peak periods, a simple transaction could cost tens or even hundreds of dollars in fees, greatly limiting ordinary user participation and further application development. Ethereum faced a severe "scalability crisis."
• Event Details: To solve this problem, the community proposed moving large amounts of computation and transactions to "Layer 2 networks" for processing, then compressing and submitting final results back to the mainnet for settlement. Among these solutions, Rollup schemes represented by Optimistic Rollups and ZK-Rollups became mainstream. During 2021-2023, Optimistic Rollup solutions represented by Arbitrum and Optimism matured first and went live, attracting large numbers of users and funds. By providing Ethereum Virtual Machine (EVM) compatible environments, they enabled developers to easily migrate their DApps to Layer 2.
• Direct Impact:
  • Dramatically Reduced Transaction Costs: Layer 2 reduced Ethereum transaction costs by 10-100 times, making many applications previously unimaginable on the mainnet (such as high-frequency trading, games, social) possible.
  • Ecosystem Diversion and Prosperity: Large numbers of DeFi and gaming projects began deploying on Layer 2 networks like Arbitrum and Optimism, forming independent yet interconnected ecosystems, greatly enhancing the overall capacity of the Ethereum system.
• Long-term Significance:
  • Established Ethereum's Modular Roadmap: Layer 2's success marked the Ethereum community's final establishment of a "Rollup-centric" modular scaling roadmap. This means the mainnet (Layer 1) focuses on being a secure and decentralized "settlement layer," while outsourcing "execution" (computation) functions to more efficient Layer 2s. This represents a profound architectural evolution.
  • Released Application Innovation Potential: By solving scalability bottlenecks, Layer 2 paved the way for the emergence of next-generation more complex blockchain applications, serving as a necessary path for Web3 to achieve mass adoption.
• Lessons Learned: When underlying infrastructure encounters bottlenecks, solving problems through "layering" and "modularization" is an effective architectural evolution strategy. However, Layer 2 also brings new challenges, such as cross-chain complexity and centralized sequencer risks.
• Subsequent Development: ZK-Rollups solutions (like StarkNet, zkSync), considered more secure and efficient Layer 2 schemes, are also rapidly developing and maturing. Proto-danksharding shipped with the Dencun upgrade on March 13, 2024, giving Layer 2s a dedicated blob data space and cutting their costs by roughly an order of magnitude. Blob demand then grew until it regularly hit the per-block limit, which the Fusaka upgrade addressed in December 2025 by activating PeerDAS. Competition and interoperability between Layer 2s remains a core focus of industry development.

3. Bitcoin Standards Beyond Payments (2017 - Present)

• Event Background: Bitcoin's standards process differs fundamentally from Ethereum's. There is no foundation that ships upgrades, and consensus changes require broad agreement among developers, miners, node operators, and businesses. The multi-year block size war of 2015-2017 established just how hard changing Bitcoin is, and how deliberately conservative the process has become.
• Event Details: Two soft forks defined what became possible.
  • SegWit (activated August 2017) restructured transactions to separate signature data into a witness section, fixing transaction malleability, effectively increasing block capacity, and applying a discount to witness data. It was the outcome of the block size war, reached through a soft fork rather than the hard fork one faction had demanded.
  • Taproot (activated November 2021 at block 709,632) introduced Schnorr signatures, allowing multiple signatures to be aggregated so that complex multi-signature spends look identical to simple ones on-chain. It also removed the size limit on witness data within a single input.
  • Together these upgrades made possible something neither was designed for: the 2023 Ordinals protocol, which uses Taproot witness fields to inscribe arbitrary data onto individual satoshis, and the BRC-20 token standard built on top of it.
• Direct Impact: Bitcoin gained an asset layer that its own developers had largely opposed building, established purely through creative use of existing capabilities rather than through any new standard being approved.
• Long-term Significance:
  • Permissionless Standards: Ordinals required no consensus change and no approval. Anyone able to construct a valid transaction could define a convention, and if enough people adopted it, a standard existed. This is a different model from Ethereum's ERC process, and it produces standards that cannot be blocked and also cannot be revised in place.
  • Off-Chain Indexing as Infrastructure: Because Bitcoin has no smart contracts, BRC-20 balances depend entirely on off-chain indexers agreeing on how to interpret inscription data. This is a considerably weaker guarantee than on-chain contract state, and it is the main structural criticism of the standard.
• Lessons Learned: Conservative protocol governance limits what gets deliberately added, but not what users can build from the primitives that already exist. Constraints shape innovation rather than preventing it.
• Subsequent Development: The Runes protocol, released around the April 2024 halving, offered a more efficient fungible token design that works with Bitcoin's UTXO model rather than against it. Debate over whether inscriptions should be filtered as spam continues within Bitcoin's development community.